Capital expenditures, or capex, refers to money that companies spend to maintain or expand their business assets. A new backhoe is capex; gasoline to run it is an operating expense. Some cases are less clear. A new employee restroom: capex. Fixing a broken john in the breakroom: opex.

Capex is important to stock investors because it signals that managers are spending money to finance growth, and because it bodes well for sellers of capital equipment. Last quarter, while the broad U.S. economy contracted slightly on a drawdown in military spending and lower exports, private investments in equipment and software jumped 12.4%, the biggest increase in five quarters.

Conditions have rarely been better for a pickup in capex. Corporations hold a record amount of cash. Managers have already boosted dividends and share repurchases, and the latter become less attractive as stock prices rise. Ultra-low interest rates provide a double nudge: punitive returns for companies that continue to hoard cash and alluring rates on equipment loans. Also, the fiscal cliff deal in early January extended a tax perk called accelerated depreciation, which sharply increases the portion of capex that companies can write off against income right away.

Follow the Money

These four companies could benefit from a rise in spending on plants, machines, and other productive assets.

PERHAPS THE BIGGEST REASON COMPANIES will increase capex is simply that it has been relatively low in recent years. "You're seeing a pickup in global growth from low levels," says Dan Suzuki, a stock strategist at Bank of America Merrill Lynch. "That, along with increased visibility, is making companies step up investment." In October, roughly one company issued capex guidance above Wall Street estimates for each one that issued guidance below estimates, according to Merrill. Now the ratio is nearly 3-to-1 in favor of capex guidance above forecasts. Standard & Poor's expects capex to climb 9.9% this year, compared with 6.9% last year.

That could give stocks a lift. Since 1990, the S&P 500 index has had a median 10.8% gain during stretches of rising capex, versus a median 7.7% decline when capex was falling, according to recent research by BMO Capital (see chart). Unsurprisingly, energy, industrial, and tech stocks enjoyed the biggest benefits from rising capex. Within those sectors, some industries saw median gains that topped 20%.

A recent search for attractive shares in those groups turned up Cameron International, which makes flow-control equipment like valves, compressors, and blowout preventers. Its customers include oil drillers, refiners, and pipeline operators. High oil prices have set off a scramble for new production, and Cameron's profits more than doubled last quarter. Its backlog of new business rose from $6 billion last year, to $8.6 billion, a company record. At $65, the stock sells for 17 times this year's earnings forecast -- but profits are expected to jump 30% next year.

Where Spending Drives Returns

Rising business investment tends to boost stocks, especially in the energy, industry, and tech sectors.

Fluor is one of the world's largest engineering and construction companies, which allows it to compete for complex jobs building power plants, bridges, oil refineries, mines, and more. Its dividend yields 1%, and the company holds around $2 billion in net cash, equal to nearly 20% of its stock-market value. Don't expect big dividend hikes, however; for infrastructure companies, cash is a competitive advantage when bidding for jobs that call for heavy upfront spending. Fluor's stock sells for 15 times this year's earnings forecast, and its growth prospects are good, especially because oil and precious-metals deposits are becoming more difficult to exploit, requiring increased spending on technology.

KLA-Tencor controls more than half of the market for semiconductor test equipment. A big research budget -- more than $450 million a year on around $3 billion in revenue -- helps it keep the lead. Test equipment can save companies money by reducing chip defects. As chip makers cram ever more circuits onto each chip, the potential for defects increases, requiring them to invest regularly in new test gear. KLA's financial results can be volatile in the short term; this is the semiconductor business, after all. Revenue in its current fiscal year, which runs through June, is projected to come in 9% below the year-earlier level if chip producers remain cautious on expansion. But they might not. JPMorgan Chase points out in a recent note to clients that chip inventories are low and that bookings have jumped since December.